This paper develops a mathematical programming model integrating individual country input-output (I-O) tables with detailed bilateral trade statistics through a three-stage optimization procedure to produce a consistent annual world I-O database. The global balanced trade and I-O statistics are obtained as a solution to a system of simultaneous equations that minimize a quadratic penalty function. The model can be used annually to update the world I-O table when industry level production and trade statistics become available.
This time-series database integrates global trade, production and consumption statistics in a consistent accounting framework. It provides a benchmark for dynamic AGE model calibration and baseline validation. In addition, it is particularly useful for the analysis of vertical specialization in global production and the interactions between different industries at different geographic locations that contribute to the same industrial value chain.
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